MD1484 Twelvetrees Crescent

Type of decision: 
Mayoral decision
Code: 
MD1484
Date signed: 
27 March 2015
Decision by: 
Boris Johnson MP (past staff), Mayor of London

Executive summary

GLA Land and Property Limited (GLAP) seeks the Mayor’s approval to enter into an option agreement and associated legal agreements (transfer, buy-back and overage agreement) for the sale of Twelvetrees Crescent to the East London Arts & Music and/ or Relevant Secretary of State; or proprietor or proposed proprietor of an Academy to facilitate the delivery of an Academy (as defined in the Academies Act 2010).

 

Decision

That the Mayor approves the sale of 0.23 hectares of land at Twelvetrees Crescent to the East London Arts & Music or its appointed delivery partner to facilitate the delivery of a new Free School.

 

Part 1: Non-confidential facts and advice

Introduction and background

1.    Introduction and background

1.1    GLAP owns the freehold interest in the Twelvetrees site comprising an area of 0.23 hectares (0.568 acres).  A site location plan is attached at Appendix 1.  The site was originally acquired by the LDA in 2003 and subsequently transferred to GLAP by statutory transfer scheme in 2012.  

1.2    A new free school is proposed; East London Arts and Music (ELAM).  ELAM proposes to open a new music and digital arts school with places for 288 pupils aged between 16-19 years. The mission of ELAM is to provide music industry standard teaching focusing on music and digital arts.  The courses would be BTEC Music Technology (equivalent to 3 A-levels) alongside literacy and numeracy qualifications (from GCSE (retakes) to A-Level) as well as work experience.  It is designed to specifically improve the outcomes of young people from the diverse backgrounds across London’s boroughs with no prescribed catchment area.  ELAM’s role is to equip young people with the technical skills and personal qualities they need to move onto university and then into employment.

1.3    The GLA’s Housing Investment Group (HIG) endorsed the decision on the 18 December 2013 to dispose via an option, of GLAP’s Twelvetrees Crescent site in Bromley-by-Bow (London Borough of Tower Hamlets) to ELAM and/ or relevant Secretary of State; or proprietor or proposed proprietor of an Academy for the provision of a new free school.

1.4    HIG further endorsed delegated authority from the Mayor to the Executive Director of Housing and Land to approve the commercial terms to dispose of the Twelvetrees Crescent site.

 

Objectives and expected outcomes

2.1    The terms of a disposal have been agreed and a sale of land at Twelvetrees Crescent to ELAM, or its appointed delivery partner is now recommended.  The key elements of the transaction are:-

2.2     Option Agreement:
•    Option Fee: £1.00 (One pound);
•    Option Period: 9 + 9 months.  
ELAM has 9 months from the date of the option agreement to exercise its option to buy the site. This timescale can be extended by a further 9 months where ELAM has either submitted a planning application and/ or appeal but this has yet to be determined
•    Option to Buy:
At the end of the option period, ELAM has the ability to exercise its option to purchase the freehold of the site from GLAP for the agreed price of £650,000 (Six Hundred and Fifty Thousand pounds)

2.3     Buy Back Agreement
    On entering into the option agreement, GLAP will also enter into a buy-back agreement with ELAM which sets out the provisions for GLAP to buy back the site for the sale price (dependent on the timing of the exercise of the option, may be indexed or revalued) if the free school is not delivered within the following timescales:
•    First Start Date:    
        One year after the date of the agreement if ELAM has not commenced the development.
•    Second Start Date:
    Three years after the date of the agreement if practical completion of the development has not occurred and less than 75% of the Development has been completed, or the date when the Secretary of State notifies that it doesn’t intend to complete the development, whichever is later.
•    Third Start Date:
Three and a half years after the date of the agreement if practical completion of the Development has not occurred, or the date when the Secretary of State notifies that it doesn’t intend to complete the development, whichever is later.
•    The buy-back agreement is also subject to step-in rights in favour of the Secretary of State.

2.4     Overage Agreement
On completion of the option agreement, GLAP will also enter into an overage agreement with ELAM which sets out the terms where overage may become payable for a period of five years from and including the date of the Agreement.

2.5    GLAP will receive overage, in the event ELAM receives planning for the Property for a use or uses other than those defined within use classes B1, B2, B8 and/or D1 of the Town and Country Planning (Use Classes) Order 1987.

Equality comments

3.1    The GLA’s public sector equality duty has been considered in relation to this recommendation and no specific issues have been identified as a result.

 

Other considerations

4.1    The sale of Twelvetrees Crescent is in line with the Mayor’s manifesto commitment to use public assets to secure sites for ten free schools and the commitment to support the Free School programme to increase the number of exceptional schools and provide more school places in the capital. 

 

Financial comments

5.1    GLAP has opted to tax this property, therefore the sale price will be subject to VAT.

5.2    Any profit on the sale of Twelvetrees itself should be a trading profit and the tax result should equate to the accounting result.

5.3    The asset known as Twelvetrees is held as asset number 9900017 and is held as a freehold development stock asset transferred from the LDA title EGL438857.

5.4    The receipt will be in line with current market value, therefore best consideration requirements are expected to be met.

5.5    The value of the option to purchase this land at market value within 18 months to facilitate the delivery of a new Free School is estimated to be negligible, so a sale at £1 is reasonable. 

 

Investment and Performance Board

7.1    Housing Investment Group (HIG) endorsed the recommendation to dispose of the land to East London Arts and Music (ELAM) at the meeting on the 18 December 2013 and 13 January 2015.  HIG minutes state:

18 December 2013
•    That the proposal that GLA Land and Property Limited (GLAP) enters into a six month exclusivity period, with East London Arts and Music free school (ELAM) or its appointed delivery partner to dispose of an interest in Twelvetrees Crescent (Twelvetrees) site for a free school, be endorsed

13 January 2015
•    That a deadline of 28 days from this meeting be set for exchange of an Option Agreement between the EFA/ELAM and the GLA.

 

Planned delivery approach and next steps

Activity

Timeline

Mayoral Decision

March 2015

Option agreement and associated legal agreements to be entered into

March 2015

Long-stop date for ELAM to exercise its option to buy the site

September 2016

 

Appendices and supporting papers

Appendix 1 – Site Plan